The March budget was delivered at a time when the economy is stagnating, output is still below 2008 levels, public and private investment is falling and unemployment and poverty levels are rising. Yet the coalition picked this time to give a windfall to the richest people in the country by announcing a tax cut of from 50p to 45p in the pound for earnings over £150,000 a year. And the people who will have to pay for it include pensioners and some of the poorest families in the country.
The windfall is worth an estimated £3 billion to the 300,000 highest earners in the UK – an average tax cut of around £10,000 a year or over £40,000 a year to the 14,000 members of the group who earn over a million pounds a year. Amongst the people who will benefit from it are Barclays’ Bob Diamond (whose 2011 package was worth £25 million), Reckitt Benckiser’s Bart Brecht (£12.1 million), Shell’s Peter Voser (£10 million plus), Barclays Rich Ricci (£10 million), FT-owner Pearsons’ Marjorie Scardino (£9.6 million), HSBC’s Stuart Gulliver (£7.1 million) and GlaxoSmithKline’s Andrew Witty (£6.7 million). The Chief Executives of FTSE 100 companies (average £4.2 million) will also benefit handsomely, as will many members of the coalition cabinet, including David Cameron who is expected to be in line for a £3,000 saving.
Companies will also benefit from the budget as a result of the decision to cut corporation tax from 26% to 24% but this is unlikely to interest companies like Amazon, which had UK sales of over £7 billion in the last three years and apparently paid no UK corporation tax at all!
But it is working people and those who can least afford it who will be expected to pay for this windfall to the super rich. They will include 4.4 million over 65s who will be £83 a year worse off on average because of Osborne’s ‘granny tax’ and people who become pensioners from next April, many of whom will be £285 a year worse off because more of their pension will be taxed. People getting tax credits will be penalised as well, due to the main element of working tax credit being frozen and eligibility criteria being changed for working and child tax credit. One result of this could be that as many as 850,000 families on modest and middle incomes could lose all of their child tax credit, worth around £545 a year. And around 212,000 working couples earning less than £17,000 a year could lose all of their working tax credit if they are unable to increase their working hours. This could mean a loss of over £3,000 a year and would be a disaster for some of the poorest working families in the country.
Labour was right to describe the changes to tax and benefits as one of the most ruthless assaults on the finances of low and middle income earners ever seen. And Ed Milliband was right to launch a savage attack on the Chancellor’s proposals on budget day. But Labour needs to show more leadership and organise a far more aggressive campaign against the coalition’s inept handling of the economy, bias towards the super rich and attacks on working peoples’ interests. The Unions also need to show more leadership and all of us need to stop agonising and start organising in our own workplaces and communities as well. Austerity for the poor is not the answer to Britain’s problems! We need to reject it and fight back!
Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.